Poly Industries, Inc. v. Don S. Mozley

This is an appeal from an order of the district court which affirmed an order of a referee in bankruptcy. The district court had jurisdiction pursuant to 11 U.S.C. § 11 . This court has jurisdiction pursuant to 11 U.S.C. § 47 .

Appellee Don S. Mozley is the Tax Collector of the County of Orange, State of California. Appellant Poly Industries, Inc., a corporation, owned a subsidiary known as Ador Corporation which was subject to county taxes in Orange County. In March 1962 and 1963, Mozley assessed personal property taxes against the Ador Corporation. These tax obligations ' had not been paid at the time these proceedings were instituted.

On January 31, 1963 Poly Industries initiated a Chapter XI proceeding under the Bankruptcy Act. On June 7, 1963 Ador Corporation initiated Chapter XI proceedings also. Poly Industries proposed a consolidated arrangement for itself and Ador Corporation pursuant to Chapter XI. Under the terms of the arrangement, creditors of Ador became creditors of Poly and took Poly stock in satisfaction of their claims. In order to satisfy the claims of priority creditors who could not be forced to take stock in Poly in lieu of their claims, Poly sold some of…